From Financial Secrecy Media Monitor

A column published in April in the Cayman Financial Review makes the case for offshore (see: http://www.compasscayman.com/cfr/2014/04/07/The-case-for-offshore/)

It starts by claiming that the arguments of offshore’s critics are based on a “profound misunderstanding of how financial transactions occur. A series of incorrect assumptions about money, business, finance and government underlie them. These assumptions are disguised by often over-heated rhetoric and pseudo-scientific or completely unscientific calculations.”

The column – by professor Andrew Morris of the University of Alabama – goes on to explain what offshore is really about: Rule of law, “cost-effective business restructuring”, and tax neutrality.

After stating that OFCs (Offshore Financial Centres) provide “specialized business entities that serve particular needs at lower costs”, the author again takes aim at critics:

“OFC critics like to suggest that such entities must be being used for some nefarious purpose. But there is nothing nefarious in organizing a captive insurance company or creating a special purpose vehicle to enable financing of a capital equipment purchase.”

“… people who don’t understand or don’t like competition, such as the Tax Justice Network, like to hint that there is something illegitimate about using a business structure in one jurisdiction to do business in another. “

This seems like a good time to reference this recent US State department report, which lists Cayman as a high risk jurisdiction, noting that there has been only one conviction for money-laundering since 2006 despite hosting a banking sector with USD 1.6 trillion in assets.

The column closes by saying:

“We need to get the word out about what really goes on in OFCs or we risk losing an important part of the global financial system.

It is not too late, but it will be soon.”

For more from Professor Morris, here is a series of videos on “The Cayman Islands Revolution” in which he “sets sail to show how the law of the Cayman Islands conforms with Hayek’s ideals, how it got that way through astute political entrepreneurship, and how the world at large benefits from its legal wisdom.”

For detailed rebuttals of these and other pro-offshore arguments please see the Treasure Islands website and the Tax Justice Network website.

For more on the ideology of offshore – including counterarguments to Hayek – please see this presentation by John Christensen, Nick Shaxson and Sam Heinrichs at a conference on tax and human rights at: http://visar.csustan.edu/aaba/christensen2011.pdf

For more on this story go to: http://financialsecrecymediamonitor.wordpress.com/2014/05/07/cayman-news-the-case-for-offshore/